Focus on Banking & Wealth Management
Local banks, tech firms gear up for mobile banking
The Business Journal of Milwaukee - by Rich Kirchen
Media
A billboard for Pyramax Bank promises “Freedom” with images of 20-somethings at a beach and at a ski resort holding cell phones — and banking remotely via the phones from those locations.
The main Web site for M&I Marshall & Ilsley Bank features “The New M&I Mobile!” M&I is offering a cell-phone upgrade to consumers who get its mobile service and run it through wireless providers Verizon Sprint, AT&T and T-Mobile.
The Pyramax and M&I promotions are local examples of banking going mobile. More than 100 banks nationwide, including heavyweights like Chase, Bank of America and Citibank have rolled out the service. More banks and credit unions are certain to follow.
“It’s the next logical step,” said Monica Baker, senior vice president of marketing for $517 million-asset Pyramax, Greenfield. “This is the next generation of how you do banking.”
Bank customers have become accustomed to doing transactions outside the bank branch, first through ATMs and more recently via the Internet. Mobile banking on cell phones is an extension of online banking and banks require customers to register via the bank Web site.
The service allows customers to check balances, pay bills and transfer funds while on the go. Some mobile banking services offer text-message alerts when account balances are low or a fraudulent transaction is suspected in a customer’s account.
Young adults, who are adept at — and trusting in — their cell phones, are the banks’ primary target for the new service. A secondary market is on-the-go professionals who carry BlackBerries, Treos or iPhones.
“This type of service is more appealing to the emerging market — Gen X and Gen Y,” said Patrick Reetz, who is an M&I vice president and online banking director.
Eighty-three percent of American cell phone users ages 21 to 34 said they would consider using mobile banking services, according to a recent survey conducted for Fiserv Inc., Brookfield, a provider of information technology services to the financial industry.
Rising expectations
The emergence of mobile banking results from a convergence of rising customer expectations, improved technology and the cooperation of wireless providers.
Text-only mobile banking has been possible on some phones through some American banks since 2000. However, the technology and capacity of cell phones has greatly improved the past two years. And consumers spend more time taking photos, scheduling meetings, playing the music and browsing the Internet — all on their phones.
While banking via text message is one option for mobile banking, doing it via a Web browser provides more functionality. So-called smart phones are best for mobile banking on the Web, but an estimated 50 percent of phones already in consumers’ hands can be used for mobile banking.
Receiving less emphasis from banks are downloadable applications that run on the customer’s phone. Downloadable mobile banking provides some functional advantages but also carries some security risks, especially if a phone is lost or stolen.
Banks do not charge customers for the basic mobile functions. M&I is charging $4.99 per transaction for an expedited, immediate payment service.
Banks are incurring costs for establishing their mobile services. However, those that are contracting for the service view the cost as a minor add-on to their online banking capability, said Doug Johnson, a vice president with the American Bankers Association. On the other hand, the largest banks that have developed their own service in-house did make “substantial expenditures,” he said.
As banks surge toward the mobile service, two Milwaukee-area firms that process transactions for financial institutions are enabling mobile banking.
Metavante Corp. of Brown Deer and Fiserv both anticipate rapid growth in the mobile-banking programs they provide to banks and credit unions.
Both firms are pursuing financial institutions that already use their online services.
“It’s all about using an online application and tying it to new delivery method,” said Calvin Grimes, Fiserv product manager at the firm’s Atlanta office.
Ramping up
Fiserv ramped up its mobile offerings in September with what it calls Fiserv Mobile Money. Fiserv is using technology from New Zealand-based Mobile Commerce Limited (M-Com), an international mobile banking and payments provider, to power the platform.
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